Shamrock Company had net income of $34,000. The weighted-average common shares outstanding were 8,500. The company declared a $3,200 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is:
a) $4.13.
b) $4.38.
c) $3.37.
d) $4.00.
e) $3.62.

d) $4.00.

Explanation:

Net Income = $34,000

Common shares outstanding = 8,500 shares

Earning Per share = Net Income for the period / Common shares outstanding

Earning Per share = $34,000 / 8,500 shares

Earning Per share = $4 per share

The company's earnings per share is $4.

Divided declared has nothing to do in the calculation of Earning per share because we just measure the earning against each share which involves net income and number of outstanding shares only.

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